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DBL%20Hendrix%20small.png College chemistry, 1983

Derek Lowe The 2002 Model

Dbl%20new%20portrait%20B%26W.png After 10 years of blogging. . .

Derek Lowe, an Arkansan by birth, got his BA from Hendrix College and his PhD in organic chemistry from Duke before spending time in Germany on a Humboldt Fellowship on his post-doc. He's worked for several major pharmaceutical companies since 1989 on drug discovery projects against schizophrenia, Alzheimer's, diabetes, osteoporosis and other diseases. To contact Derek email him directly: derekb.lowe@gmail.com Twitter: Dereklowe

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December 3, 2012

Marcia Angell's Interview: I Just Can't

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Posted by Derek

I have tried to listen to this podcast with Marcia Angell, on drug companies and their research, but I cannot seem to make it all the way through. I start shouting at the screen, at the speakers, at the air itself. In case you're wondering about whether I'm overreacting, at one point she makes the claim that drug companies don't do much innovation, because most of our R&D budget is spent on clinical trials, and "everyone knows how to do a clinical trial". See what I mean?

Angell has many very strongly held opinions on the drug business. But her take on R&D has always seemed profoundly misguided to me. From what I can see, she thinks that identifying a drug target is the key step, and that everything after that is fairly easy, fairly cheap, and very, very profitable. This is not correct. Really, really, not correct. She (and those who share this worldview, such as her co-author) believe that innovation has fallen off in the industry, but that this has happened mostly by choice. Considering the various disastrously expensive failures the industry has gone through while trying to expand into new diseases, new indications, and new targets, I find this line of argument hard to take.

So, I see, does Alex Tabarrok. I very much enjoyed that post; it does some of the objecting for me, and illustrates why I have such a hard time dealing point-by-point with Angell and her ilk. The misconceptions are large, various, and ever-shifting. Her ideas about drug marketing costs, which Tabarrok especially singles out, are a perfect example (and see some of those other links to my old posts, where I make some similar arguments to his).

So no, I don't think that Angell has changed her opinions much. I sure haven't changed mine.

Comments (59) + TrackBacks (0) | Category: Business and Markets | Drug Development | Drug Industry History | Drug Prices | Why Everyone Loves Us


COMMENTS

1. RB Woodweird on December 3, 2012 12:02 PM writes...

Das ist nicht nur nicht richtig, es ist nicht einmal falsch!

Permalink to Comment

2. darwin on December 3, 2012 12:10 PM writes...

Given her educational background and career, she could have more credibility and influence tackling policy and corruption within the AMA. But then again, that probably wouldn't make headlines or sell books.

Permalink to Comment

3. Biotechtranslated on December 3, 2012 12:55 PM writes...

Derek,

I had that same podcast bookmarked to listen to at a later time. I think you've convinced me to skip it.

There is nothing wrong with listening to the opposing side, but if it's that misinformed, it loses any intellectual value.

Mike

Permalink to Comment

4. microbiologist on December 3, 2012 1:31 PM writes...

Two pieces of misinformation struck me:
First, that all drugs are discovered either in academic labs or in small companies that have spun out of academic labs. Thus, she says, drug discovery is all publicly funded (eg, by NIH grants).

Second, that me-too drugs are tested vs placebo rather than vs existing, similar drugs - so there is no way to know whether a newly approved drug is any better than a previous drug in its class.

It is shocking that someone with so poor an understanding of drug discovery and development could have been an editor at NEJM for 20 years.

Permalink to Comment

5. LeeH on December 3, 2012 1:33 PM writes...

I agree with your points completely, Derek. I do agree with a few of her points (which she makes in her book), especially her views on pharmaceutical advertising. Imagine if a good part of marketing money was freed up, and directed at research.

Permalink to Comment

6. Aspirin on December 3, 2012 1:37 PM writes...

Angell: "Far from being a “research-based industry,” as it likes to call itself, the pharmaceutical industry now devotes most of its resources to functioning as a vast marketing and advertising enterprise whose best products were discovered and often partially developed elsewhere—usually at public expense."

Right. That's what I and thousands of other scientists in pharma do all day long, marketing and advertising. Can't believe this git was the editor of the NEJM.

Permalink to Comment

7. Yancey Ward on December 3, 2012 1:48 PM writes...

Lee H,

The problem is that people don't realize that marketing is necessary part of a business. You say marketing dollars can be freed up for research, but without the marketing, the revenue to support such activities don't exist in the first place.

Permalink to Comment

8. Curious Wavefunction on December 3, 2012 2:08 PM writes...

#7: True, but DTC has given pharma a great incentive to spend a lot more money on marketing than what seems reasonable (IMO, DTC was a big mistake since it unduly raised the profile of marketing relative to research).

I do think that some of those marketing dollars can be used in productive research; if you have a truly life-changing drug, then you may not have to market the hell out of it to make it successful.

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9. drug_hunter on December 3, 2012 2:50 PM writes...

She's shrill and nasty and supercilious, that's for sure ... She is obviously ignoring all the data that doesn't agree with her worldview. I'll assume it is not stupidity -- so she is deliberately pursuing an agenda.

Does anyone know what is motivating her? (I have a theory but I'd like to hear what others think.)

And, is anyone who matters actually listening to her? In other words, is she actually influencing the FDA or Congress?

Permalink to Comment

10. emjeff on December 3, 2012 3:05 PM writes...

#8 - Define "reasonable". You won't be able to, because what is reasonable to you may not be to me. I think it is ok for private enerprises to spend their money on legal things designed to increase profits.

Sorry, but that is the way it is. As soon as you try to put rules around that, you are entering the world of government control, which spells doom.

Permalink to Comment

11. Rafael Fonseca MD on December 3, 2012 3:12 PM writes...

I am glad to see more posts like this. Those misconceptions (i.e Dr Angel's) are unfortunately perpetuated in medical journals (See Lesko and Stossel Nature Biotechnology 2011). It is undeniable that the biotech sector and pharma contribute greatly to human well being. Much more than they ever get credit! Lost of progress because of the partnership with academic centers! But people have been shy and feared speaking out. We created ACRE 3 years ago and most were quiet reluctant to speak up.

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12. Curious Wavefunction on December 3, 2012 3:53 PM writes...

#8: Yes, we can differ on the definition of reasonable, but at some point the gap between marketing and actual product quality can be objectively judged. If the gap is large (and although "large" is also subjective, it should be subject to better metrics than "reasonable") it should give you pause for thought. There should be an obvious problem if you have to spend billions on marketing to convince people to buy snake oil.

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13. jane doe on December 3, 2012 4:07 PM writes...

I'm not sure how anyone can defend the market distorting patent monopolies that lead to copycat research, insanely distorted prices, lack of transparent research, corruption of doctors, corruption of government policy, etc.

But rent seeking and extraction of income is often not opposed by nanny state conservatives that believe in being defended from the rigors of the free market.

Permalink to Comment

14. newnickname on December 3, 2012 4:10 PM writes...

@7 and others. I also take issue with "marketing" versus "mis-marketing". Too much of the advertising budgets boost sales inappropriately (medically, that is). I am also very much against DTC advertising and think it should be stopped.

An almost off-topic question: I sometimes refer to cortisone and hydrocortisone, miracle drugs of the 1950s. Today, a 30 g tube of 10% hydrocortisone costs a few of dollars (retail). Does anyone have any idea how much cortisone cost in its earliest days? I think the old pharmaceutical price books are archived somewhere but I can't find them on-line. Thank you.

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15. Lyle Langley on December 3, 2012 4:13 PM writes...

@#10, emjeff....
"Sorry, but that is the way it is. As soon as you try to put rules around that, you are entering the world of government control, which spells doom."

Ummm, the government already has those controls - they control the prescription drug business and the marketing of said drugs. The main argument is DTC which was not allowed until relatively recently.

Permalink to Comment

16. Fred on December 3, 2012 4:35 PM writes...

"From what I can see, she thinks that identifying a drug target is the key step, and that everything after that is fairly easy, fairly cheap, and very, very profitable."

If that were true, we wouldn't have so many targets lacking potent and/or adequately selective inhibitors.

Permalink to Comment

17. MTK on December 3, 2012 4:55 PM writes...

Dr. Angell's logic as I understand it is

a) pharma doesn't innovate only sell, and
b) pharma is only interested in making money.

The flaw here is that pharma not only spends a lot of money on clinical trials, but also on scientific talent. (OK,insert your outsourcing joke here, but let's face it they do, certainly more than academia.)

If a and b are true when would they spend all that money on talent at all?

Permalink to Comment

18. Jane Doe on December 3, 2012 5:28 PM writes...

The argument is not whether everything pharma does is bad. The argument is if an alternative to pharma would be better. Government backed research that put all of their findings into the public domain, stopped the incentive for copycat research, lowered the costs of drugs to the production price (like generics), etc.

This alternative would lead to more innovation, be more efficient, lower costs for otherwise insanely expensive drugs, and advance the progress of medical research.

But unfortunately nanny state conservatives need the government to interfere in the free market by giving them a market distorted monopoly prices.

Permalink to Comment

19. qetzal on December 3, 2012 6:07 PM writes...

@Jane Doe:

Developing drugs publicly won't cause true prices to drop to the production price. It costs a lot of money to develop a drug, prove it works in patients, scale up its manufacture, meet the regulatory requirements, etc. Doing that with taxes wouldn't magically eliminate those costs. At best, it would only eliminate the pharma profit component. Many would also argue that govt would likely do it less efficiently than pharma, which would (if true) at least partly abrogate the saved profits.

Of course, the govt could then choose to sell drugs based only on the production costs, but you'd still be paying the development costs. They'd just be disguised as taxes, and you wouldn't even have the option of deciding whether you wanted to pay for those drugs.

I'm not necessarily arguing that public development of drugs is a bad idea. (FWIW, I generally favor single-payer health care.) I'm just saying it's not nearly as black and white as you've suggested.

Permalink to Comment

20. A Casual Observer on December 3, 2012 6:44 PM writes...

It's a shame she knows so little about R&D and is so out of touch with the current situation, because there are a few good points in there. As it is, she sounds like (at best) she stopped watching long ago (all the trials are against placebo? really?), so if you're at all familiar with reality she just sounds like an idiot and is easy to dismiss.

Basically she's locked in to the theory that it's all about the conflicts of interest and a big conspiracy, and can't seem to get it into her head that there are other factors involved that make things complicated. The interviewer does do a good job, in a few but not enough places, of pointing out a select few of her blind spots.

Where does she have a point? Well, it really is goofy that (almost) all the data is from work conducted by the pharmas (would we accept that for cars or food?), intolerable that there exist FDA-approved human studies that don't get around to publishing most of their data, Nexium really was a travesty, and pharma marketing practices have gotten better but still not exactly unimpeachable.

Others are doing a much better job than Angell of discussing pharma's failings for a general audience -- see for example "Bad Science" by Ben Goldacre.

Permalink to Comment

21. Jane Doe on December 3, 2012 8:15 PM writes...

"...but you'd still be paying the development costs"

Of course, but there are probably an infinite number of alternatives that would be more efficient and lead to more innovation.

From Dean Baker's Guardian Piece entitled Why pharma's patents are a drug on the market: "The country is projected to spend almost $300bn a year on prescription drugs this year. Prices would fall to roughly one-tenth this amount in the absence of patent monopolies, leading to savings of more than $250bn."

He suggests the Sanders prize fund or "the route of direct, upfront government funding where the government would contract for the research in advance."

He also points out that going to an alternative system would also 1) Eliminate bureaucracy 2) Cheap life saving drugs 3) Less incentive for deceptive marketing 4) Less incentive for copycat drugs 5) Publicly available research

He concludes: "The Centres for Medicare and Medicaid Research project that we will spend almost $4tn on prescription drugs over the next decade. This is almost $10,000 for every man, woman and child in the country."

You may think these kind of development costs are worth it, but I personally don't like the government distorting market outcomes through invasive nanny state interference.

Permalink to Comment

22. DH on December 3, 2012 8:38 PM writes...

@Jane Doe: Constant repetition of the talking point that patent protection is "nanny state interference" does not make it true. But if you really do oppose nanny state interference, presumably you favor abolishing the FDA, which tells us what we can and cannot put in our bodies of our own free choice. So let's agree to abolish both drug patents and the FDA, and to let pharma companies keep their drug structures and formulations as proprietary trade secrets. That way, they can protect their investments without any government distortion of the rigors of the free market. Deal?

Permalink to Comment

23. Inventor on December 3, 2012 8:50 PM writes...

I'm listening to the pod cast and I'm frankly stunned. Does everyone have the same genome (me-too drugs)? Is potency the same as efficacy? Does she have an ax to grind? I don't get it.

Permalink to Comment

24. Anonymous Academic on December 3, 2012 9:05 PM writes...

@22: I personally don't like the government distorting market outcomes through invasive nanny state interference.

I'm not very sympathetic to the business end of Big Pharma either, but I think you have your buzzwords confused. Making this statement, after multiple comments in which you suggest that the government could do a better job of drug development than the pharmaceutical companies, is simply incoherent.

Permalink to Comment

25. Jane Doe on December 3, 2012 9:07 PM writes...

It's not a me-too drug if they are making a slightly different version of a drug because a portion of the population doesn't respond to an existing drug. That probably happens inadvertently already, but with multiple (and IMO much worse) costs that clearly outweigh the benefits of these me-too drugs.

Due to the government granted monopoly, companies have a huge incentive to simply create a me-too drug that isn't shown to benefit a different population. They know they can make a clinically indistinguishable version and by using advertising and kickbacks influence consumer preference (government interference in the market often creates perverse incentives).

Permalink to Comment

26. Jane Doe on December 3, 2012 9:28 PM writes...

AA

Big pharma is a government created industry (it wouldn't exist without it granting monopolies and other interference). Thus the government is already developing our drugs.

The very nature of drug development (as we're used to it) requires substantial government intervention. I'm simply making it clear that this form of the nanny-state is projected to extract nearly $10,000 from tax payers over the next decade for prescription drugs.

If you want less government interference (less taxes and less distortions from granting monopolies) leading to more efficient outcomes, These alternative funding mechanisms, like the Sanders prize fund or "upfront government funding where the government would contract for the research in advance" would lead to substantially less government created distortions and inefficiencies (if we are going to have a nanny-state, it might as well work).

Permalink to Comment

27. Hyperion on December 3, 2012 10:24 PM writes...

Jane,

I think that you may be misunderstanding how "me-too" drugs are developed. In many cases, these drugs are all in development at the same time, with no way of knowing which drug will be approved first or which of them might prove to be useless due to some unexpected property not shared by similar drugs.

Similarly, there is often no way of determining what the differences between these drugs will be before Phase III testing, which is where a lot of the costs come into play. So the distinction that you make between "me-too" drugs and those where slight differences lead to pharmacological differences is a false distinction.

Finally, your assertions about efficiency and cost are muddled and unclear. Many of the costs related to drug development are an inherent part of the difficulty involved and the (absolutely necessary) regulatory requirements for clinical testing. From a public policy perspective (as a former public policy analyst), our system for drug development, while imperfect, is still fairly efficient. The risks are borne by private enterprise, in exchange for a limited monopoly to recoup their profits. The monopoly period is limited such that it creates an incentive for the companies to continue to research new drugs or risk a massive drop in profits as patents expire.

There are certainly areas where this system runs into market failures: antibiotic drugs, for example. The necessity to use new antibiotics sparingly dramatically reduces their profitability during the limited period where a company has an exclusive patent, thus limiting the incentives to develop such drugs.

There is also the issue of how to handle a new indication for a drug after its patent has expired. It can be prescribed off-label (which Angell opposes), or it can go through the approval process for the new indication just as if it were a new drug, with all the same costs, in which case the drug can often recieve a new patent for the new indication. This creates a difficult choice: is it better to have access to a drug as an affordable generic or is it better to obtain the best clinical evidence before using a drug for a new indication? There is no easy answer, the former choice gets people like Angell complaining, but the latter choice causes complaints about a drug suddenly increasing in price.

Ultimately this is all about tradeoffs. There is no perfect system, the current system has flaws, but so do any proposed changes. This, ultimately, is the flaw in your reasoning and Angell's.

(as an aside, I also don't get Angell's obvious issues. I remember reading her fawning review of Whittaker's book a few years back and thinking that she must have no experience in medicine. Since this is obviously not the case, what is her agenda?)

Permalink to Comment

28. Hyperion on December 3, 2012 10:25 PM writes...

Jane,

I think that you may be misunderstanding how "me-too" drugs are developed. In many cases, these drugs are all in development at the same time, with no way of knowing which drug will be approved first or which of them might prove to be useless due to some unexpected property not shared by similar drugs.

Similarly, there is often no way of determining what the differences between these drugs will be before Phase III testing, which is where a lot of the costs come into play. So the distinction that you make between "me-too" drugs and those where slight differences lead to pharmacological differences is a false distinction.

Finally, your assertions about efficiency and cost are muddled and unclear. Many of the costs related to drug development are an inherent part of the difficulty involved and the (absolutely necessary) regulatory requirements for clinical testing. From a public policy perspective (as a former public policy analyst), our system for drug development, while imperfect, is still fairly efficient. The risks are borne by private enterprise, in exchange for a limited monopoly to recoup their profits. The monopoly period is limited such that it creates an incentive for the companies to continue to research new drugs or risk a massive drop in profits as patents expire.

There are certainly areas where this system runs into market failures: antibiotic drugs, for example. The necessity to use new antibiotics sparingly dramatically reduces their profitability during the limited period where a company has an exclusive patent, thus limiting the incentives to develop such drugs.

There is also the issue of how to handle a new indication for a drug after its patent has expired. It can be prescribed off-label (which Angell opposes), or it can go through the approval process for the new indication just as if it were a new drug, with all the same costs, in which case the drug can often recieve a new patent for the new indication. This creates a difficult choice: is it better to have access to a drug as an affordable generic or is it better to obtain the best clinical evidence before using a drug for a new indication? There is no easy answer, the former choice gets people like Angell complaining, but the latter choice causes complaints about a drug suddenly increasing in price.

Ultimately this is all about tradeoffs. There is no perfect system, the current system has flaws, but so do any proposed changes. This, ultimately, is the flaw in your reasoning and Angell's.

(as an aside, I also don't get Angell's obvious issues. I remember reading her fawning review of Whittaker's book a few years back and thinking that she must have no experience in medicine. Since this is obviously not the case, what is her agenda?)

Permalink to Comment

29. Hyperion on December 3, 2012 10:26 PM writes...

Jane,

I think that you may be misunderstanding how "me-too" drugs are developed. In many cases, these drugs are all in development at the same time, with no way of knowing which drug will be approved first or which of them might prove to be useless due to some unexpected property not shared by similar drugs.

Similarly, there is often no way of determining what the differences between these drugs will be before Phase III testing, which is where a lot of the costs come into play. So the distinction that you make between "me-too" drugs and those where slight differences lead to pharmacological differences is a false distinction.

Finally, your assertions about efficiency and cost are muddled and unclear. Many of the costs related to drug development are an inherent part of the difficulty involved and the (absolutely necessary) regulatory requirements for clinical testing. From a public policy perspective (as a former public policy analyst), our system for drug development, while imperfect, is still fairly efficient. The risks are borne by private enterprise, in exchange for a limited monopoly to recoup their profits. The monopoly period is limited such that it creates an incentive for the companies to continue to research new drugs or risk a massive drop in profits as patents expire.

There are certainly areas where this system runs into market failures: antibiotic drugs, for example. The necessity to use new antibiotics sparingly dramatically reduces their profitability during the limited period where a company has an exclusive patent, thus limiting the incentives to develop such drugs.

There is also the issue of how to handle a new indication for a drug after its patent has expired. It can be prescribed off-label (which Angell opposes), or it can go through the approval process for the new indication just as if it were a new drug, with all the same costs, in which case the drug can often recieve a new patent for the new indication. This creates a difficult choice: is it better to have access to a drug as an affordable generic or is it better to obtain the best clinical evidence before using a drug for a new indication? There is no easy answer, the former choice gets people like Angell complaining, but the latter choice causes complaints about a drug suddenly increasing in price.

Ultimately this is all about tradeoffs. There is no perfect system, the current system has flaws, but so do any proposed changes. This, ultimately, is the flaw in your reasoning and Angell's.

(as an aside, I also don't get Angell's obvious issues. I remember reading her fawning review of Whittaker's book a few years back and thinking that she must have no experience in medicine. Since this is obviously not the case, what is her agenda?)

Permalink to Comment

30. Hyperion on December 3, 2012 10:27 PM writes...

Jane,

I think that you may be misunderstanding how "me-too" drugs are developed. In many cases, these drugs are all in development at the same time, with no way of knowing which drug will be approved first or which of them might prove to be useless due to some unexpected property not shared by similar drugs.

Similarly, there is often no way of determining what the differences between these drugs will be before Phase III testing, which is where a lot of the costs come into play. So the distinction that you make between "me-too" drugs and those where slight differences lead to pharmacological differences is a false distinction.

Finally, your assertions about efficiency and cost are muddled and unclear. Many of the costs related to drug development are an inherent part of the difficulty involved and the (absolutely necessary) regulatory requirements for clinical testing. From a public policy perspective (as a former public policy analyst), our system for drug development, while imperfect, is still fairly efficient. The risks are borne by private enterprise, in exchange for a limited monopoly to recoup their profits. The monopoly period is limited such that it creates an incentive for the companies to continue to research new drugs or risk a massive drop in profits as patents expire.

There are certainly areas where this system runs into market failures: antibiotic drugs, for example. The necessity to use new antibiotics sparingly dramatically reduces their profitability during the limited period where a company has an exclusive patent, thus limiting the incentives to develop such drugs.

There is also the issue of how to handle a new indication for a drug after its patent has expired. It can be prescribed off-label (which Angell opposes), or it can go through the approval process for the new indication just as if it were a new drug, with all the same costs, in which case the drug can often recieve a new patent for the new indication. This creates a difficult choice: is it better to have access to a drug as an affordable generic or is it better to obtain the best clinical evidence before using a drug for a new indication? There is no easy answer, the former choice gets people like Angell complaining, but the latter choice causes complaints about a drug suddenly increasing in price.

Ultimately this is all about tradeoffs. There is no perfect system, the current system has flaws, but so do any proposed changes. This, ultimately, is the flaw in your reasoning and Angell's.

(as an aside, I also don't get Angell's obvious issues. I remember reading her fawning review of Whittaker's book a few years back and thinking that she must have no experience in medicine. Since this is obviously not the case, what is her agenda?)

Permalink to Comment

31. Hyperion on December 3, 2012 10:30 PM writes...

Akkk, my apologies for the repeated post, I think my tablet is misbehaving.

Permalink to Comment

32. Hyperion on December 3, 2012 10:31 PM writes...

Akkk, my apologies for the repeated post, I think my tablet is misbehaving.

Permalink to Comment

33. qetzal on December 3, 2012 11:47 PM writes...

"The country is projected to spend almost $300bn a year on prescription drugs this year. Prices would fall to roughly one-tenth this amount in the absence of patent monopolies, leading to savings of more than $250bn."

Sure, if you remove patent protection on drugs where the development cost is already sunk, then prices can fall to near production cost. To a first approximation, that's what generics are, right?

That still doesn't address the need to pay development costs for drugs that don't yet exist.

Or are you suggesting that on average, patented drugs are priced at 10 times the total development cost?! Yes, pharma has generally been profitable, but I'm pretty sure they don't get a 900% return on investment!

When I see such misunderstanding of basic issues, it makes it very hard to give much credence to blithe pronouncements of eliminating bureaucracy, cheap life-saving drugs, etc. Not that I think the current system is the best possible. Far from it. But people who clearly don't understand basic realities of the current system are not likely to know how to make things better.

Permalink to Comment

34. Jane Doe on December 4, 2012 12:25 AM writes...

Qetzal:

"That still doesn't address the need to pay development costs for drugs that don't yet exist."

Straw man. If you go back and look at my above posts I suggest two alternatives (one from Senator Bernie Sanders, one from the Economist Dean Baker). Both would lead better outcomes at lower costs.

Permalink to Comment

35. Jane Doe on December 4, 2012 12:56 AM writes...

Hyperion

"Ultimately this is all about tradeoffs. There is no perfect system, the current system has flaws, but so do any proposed changes. This, ultimately, is the flaw in your reasoning and Angell's."

More fallacious reasoning. Everyone already acknowledges this comes down to tradeoffs, and people like Angell believe an alternative system would have less flaws.

To say that this system is "fairly efficient" is quite the assertion. But given that you're the "former public policy analyst," I assume I'm supposed to accept it without evidence.

Our system is far from being efficient and there are many alternatives that would decrease the massive rent seeking. But given that my assertions are "muddled" I'll quote one paper that I've been referring to.

From Dean Baker's 2004 paper "Financing Drug Research: What Are The Issues?":

"Patent monopolies cause economic distortions in the same way that trade tariffs or quotas lead to economic distortions, but the size of the distortions are far greater. While trade barriers rarely increase prices by more than 10 to 20 percent, drug patents increase prices by an average of 300- 400 percent above the competitive market price, and in some cases the increase is more than 1000 percent. Simple calculations suggest that the deadweight efficiency losses from patent protection are roughly comparable in size to the amount of research currently supported by the patent system – approximately $25 billion in 2004.

Projections of rapidly rising research costs, and therefore a growing gap between price and marginal cost, imply that the deadweight loss due to drug patents will exceed $100 billion a year by 2013.

As economic theory predicts, government granted patent monopolies lead not only to deadweight efficiency losses due to the gap between the patent protected price and the competitive market price, but also to a variety of other distortions. Among these distortions are:

1) excessive marketing expenses, as firms seek to pursue the monopoly profits associated with patent protection – data from the industry suggests that marketing costs are currently comparable to the amount of money sp